The S&P 500 Index ($SPX) (SPY) on Tuesday closed up +0.61%, the Dow Jones Industrial Average ($DOWI) (DIA) closed down -0.23%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed up +1.76%. June E-mini S&P futures (ESM26) rose +0.61%, and June E-mini Nasdaq futures (NQM26) rose +1.72%.
Stock indexes settled mostly higher on Tuesday, with the S&P 500 and Nasdaq 100 posting new all-time highs. Stocks found support as a drop in crude oil prices and bond yields fueled a rally in technology stocks after officials signaled the US was nearing a deal with Iran to reopen the Strait of Hormuz and restore oil flows. According to the Washington Post, the US and Iran have developed a memorandum that would extend the ceasefire by 60 days as the two sides seek a permanent deal, and if agreed, the Strait of Hormuz would be de-mined and reopened in the meantime. Secretary of State Rubio said negotiations will still "take a few days" as both sides discuss language in an initial document. WTI crude oil fell to a 2.5-week low on Tuesday, and the 10-year T-note yield fell to a 1.5-week low of 4.47%.
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However, stock index futures were undercut after the US Central Command said US forces struck Iranian missile-launch sites and boats trying to place mines in the Strait of Hormuz. Also, weakness in health insurance stocks and energy producers on Tuesday knocked the Dow Jones Industrial Average into negative territory.
Tuesday’s US economic news was mixed for stocks. The Apr Chicago Fed National Activity Index rose +0.29 to a 13-month high of 0.14, stronger than expectations of -0.03. Also, the Mar S&P Composite-20 home price index rose +0.83% y/y, a smaller increase than the +0.90% y/y expected and the smallest year-on-year gain in more than 2.5 years. In addition, the Conference Board US May consumer confidence index fell -0.7 to 93.1, a smaller decline than expectations of 92.0.
WTI crude oil prices (CLM26) remain extremely volatile and are susceptible to headlines from the Iran war. Crude oil prices fell more than -2% on Tuesday to a 2.5-week low after the US and Iran said peace talks were progressing. However, crude prices rebounded from their worst levels after US and Israeli jets struck missile sites in Iran and boats laying mines in the Strait of Hormuz.
The International Energy Agency (IEA) said in a recently released monthly report that global oil inventories declined at a rate of about 4 million bpd in March and April, and the market will remain “severely undersupplied” until October even if the conflict ends next month. Goldman Sachs estimates that the current disruption has drawn down nearly 500 million bbl from global crude stockpiles, with the drawdown potentially reaching 1 billion bbl by June.
The markets are discounting a 3% chance of a -25 bp FOMC rate cut at the next FOMC meeting on June 16-17.
Earnings season is winding down, and reports thus far have been supportive of stocks. As of Tuesday, 83% of the 475 S&P 500 companies that reported Q1 earnings have beaten estimates. Q1 S&P 500 earnings are projected to climb +12% y/y, according to Bloomberg Intelligence. Stripping out the technology sector, Q1 earnings are projected to increase around +3%, the weakest in two years.
Overseas stock markets settled lower on Tuesday. The Euro Stoxx 50 closed down -1.18%. China's Shanghai Composite closed down -0.17%. Japan's Nikkei Stock Average closed down -0.25%.
Interest Rates
June 10-year T-notes (ZNM6) on Tuesday closed up by +18.5 ticks. The 10-year T-note yield fell -6.9 bp to 4.489%. June T-note prices rallied to a 1.5-week high on Tuesday, and the 10-year T-note yield fell to a 1.5-week low of 4.473%. Tuesday’s -2% fall in WTI crude oil prices reduced inflation expectations and is bullish for T-note prices. The 10-year breakeven inflation rate fell to a 1-month low of 2.375% on Tuesday. T-notes maintained their gains on decent demand for the Treasury’s $69 billion auction of 2-year T-notes that has a bid-to-cover ratio of 2.64, better than the 10-auction average of 2.61.
European government bond yields on Tuesday were mixed. The 10-year German Bund yield rose +3.3 bp to 2.979%. The 10-year UK gilt yield fell to a 5-week low of 4.820% and finished down -2.2 bp to 4.875%.
ECB Executive Board member Isabel Schnabel said even if there's a quick resolution to the conflict in the Middle East, "I think a rate hike by the ECB in June will be needed." She added that "given the high persistence of the energy shock, I believe that the negative impact on economic growth will also be stronger" than initially expected.
ECB Chief Economist Philip Lane said the ECB will probably raise its quarterly inflation outlook at next month's policy meeting as the Iran war keeps energy prices elevated.
Swaps are discounting a 91% chance of a +25 bp ECB rate hike at its next policy meeting on June 11.
US Stock Movers
Chipmakers and AI infrastructure stocks rallied on Tuesday, helping lift the broader market. Micron Technology (MCHP) closed up more than +20% to lead gainers in the S&P 500 and Nasdaq 100 after UBS raised its price target on the stock to $1,625 from $535, and ON Semiconductor (ON) closed up more than +10%. Also, Western Digital (WDC) closed up more than +8%, and Sandisk (SNDK) and Advanced Micro Devices (AMD) closed up more than +7%. In addition, Marvell Technology (MRVL) and KLA Corp (KLAC) closed up more than +6%, and Applied Materials (AMAT), Analog Devices (ADI), Microchip Technology (MCHP), NXP Semiconductors NV (NXPI), Lam Research (LRCX), and Texas Instruments (TXN) closed up more than +5%.
Airlines and cruise line operators moved higher on Tuesday after WTI crude oil prices fell to a 2.5-week low, reducing fuel costs and bolstering profitability prospects. American Airlines Group (AAL) closed up more than +7%, and Alaska Air Group (ALK) closed up more than +6%. Also, United Airlines Holdings (UAL) closed up more than +5%, and Delta Air Lines (DAL), Norwegian Cruise Line Holdings (NCLH), and Royal Caribbean Cruises Ltd (RCL) closed up more than +4%. In addition, Southwest Airlines (LUV) closed up more than +3%, and Carnival (CCL) closed up more than 2%.
Rocket and satellite companies moved sharply higher on Tuesday after SpaceX filed to become the largest-ever initial public offering. Redwire (RDW) closed up more than +26%, Firefly Aerospace (FLY) closed up more than +18%, and AST Spacemobile (ASTS) closed up more than +12%.
Energy producers and energy service providers retreated on Tuesday after WTI crude oil prices slid to a 2.5-week low. Devon Energy (DVN) closed down more than -4%, and Chevron (CVX) closed down more than -3% to lead losers in the Dow Jones industrials. Also, Exxon Mobil (XOM), ConocoPhillips (COP), and APA Corp (APA) closed down more than -3%, and Diamondback Energy (FANG), Marathon Petroleum (MPC), Occidental Petroleum (OXY), Phillips 66 (PSX), and Valero Energy (VLO) closed down more than -2%.
Defensive health insurance stocks were under pressure with Tuesday’s rally in the broader market. Centene (CNC) closed down more than -3%, and UnitedHealth Group (UNH), Humana (HUM), and CVS Health (CVS) closed down more than -2%. Also, Elevance Health (ELV) and Cigna Group (CI) closed down more than -1%.
Allient (ALNT) closed up more than +12% after JPMorgan Chase upgraded the stock to overweight from neutral with a price target of $80.
Autoliv (ALV) closed up more than +3% after Handelsbanken upgraded the stock to buy from hold with a price target of $145.
AutoZone (AZO) closed down more than -8% to lead losers in the S&P 500 after reporting Q3 net sales of $4.84 billion, below the consensus of $4.87 billion. Also, O’Reilly Automotive (ORLY) is down more than -4% to lead losers in the Nasdaq 100.
Intuit (INTU) closed down more than -4% to lead losers in the Nasdaq 100 after Mizuho Securities cut its price target on the stock to $500 from $600.
Earnings Reports(5/27/2026)
Agilent Technologies Inc (A), Bath & Body Works Inc (BBWI), Dick's Sporting Goods Inc (DKS), Everpure Inc (P), HEICO Corp (HEI), HP Inc (HPQ), Marvell Technology Inc (MRVL), nCino Inc (NCNO), Nutanix Inc (NTNX), Salesforce Inc (CRM), Snowflake Inc (SNOW), Synopsys Inc (SNPS), U-Haul Holding Co (UHAL).
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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